signs

Fueled by a burgeoning economy, shoppers have slowly but surely rekindled their love affair with plastic. A new MasterCard analysis shows that in 2012, U.S. credit card volume grew by $172 billion year-over-year, an increase of 8.4%.

We’ve pretty much done a complete 180 since the onset of the recession. Back in 2008, Americans shifted more than $140 billion from credit to debt card spending.

You could say consumers are simply feeling more secure about their ability to handle credit card bills these days. But looking closer at the study, we found two dangerous signs that we could be getting in over our heads again.

More than half of credit users say they continuously carry a balance on their accounts and 54% of consumers say they use credit for rewards, up a full 9 points from 2008.

Credit lenders are incentivizing overspending and consumers are clearly taking the bait.

Already, we can see the effect rewards are having on credit use. The average credit card transaction is only $93, signaling that consumers are leaning on credit even for everyday purchases in order to get rewards.

Warning Signs

Credit perks are all well and good if you’re planning on paying your card down each month. But what’s the point in cashing in credit rewards if you’re dragging your credit score down and running the risk of paying late payment fees in the process?

There’s real danger in relying on credit cards just for a fe! w extra cashback points. First of all, carrying balance on your credit card is one of the easiest ways to lower your credit score. You’re basically telling lenders that you’re willing to rack up charges without having the means to pay them off in quick fashion.

“The amount of debt a consumer carries tends to be highly predictive of future credit performance because the amount a person owes has a direct impact on her or his ability to pay all their credit obligations on time each month,” says Barry Paperno, consumer operations manager for myFICO.com. “While having debt doesn’t automatically put someone in a high-risk category, as balances increase, the probability of having difficulty making payments on time each month increases.”

In an ideal world, everyone would pay down their credit card balance in full each month. Realistically speaking, most experts recommend keeping your total debt load at one-third of your available credit limit.

We’d recommend going even further. A recent FICO report found that people with the highest credit scores typically carried debt loads less than 7% of their total limits.

A good rule of thumb: If you’re about to use a credit card, just ask yourself if you’d be making that purchase if you were using cash instead. If the answer is no, chances are you’re better off keeping that card parked in your wallet.

Younger consumers more prone to look for content on social

Search continues to be a prime digital entry point for many UK consumers. As such, search continues to account for the largest proportion of digital ad spend in the country, according to eMarketer estimates. But there are signs of some shifting habits in terms of how UK web users find online content.

Research from video search techonology company blinkx finds that UK consumers, and particularly younger ones, are beginning to find a lot of their online content via social media. The May 2013 study showed that 43% of polled UK internet users between ages 18 and 24 chose social media to find content online over search.

As an indicator of the move away from search as the default for information discovery, eMarketer forecasts that search’s share of total digital ad spend will decline slightly from 2014 onward. Display is set to be the beneficiary, with video growing its share of that total throughout the forecast period.

Agencies are increasingly being compensated on a fee rather than commission basis, a shift that first took place in the mid-90s and appears to show no signs of slowing, according to final study results released by the Association of National Advertisers (ANA). The 98 client-side marketers responding to the survey, who represented more than 1,000 agency agreements, indicated that fee-based agreements dominate (81%) in comparison with commission-based (5%) and other (14%) methods.

WhatsApp Reaches 300 Million Active Users (Statista)
WhatsApp, the over-the-top (OTT) mobile messaging app that bypasses carrier SMS fees and allows mobile users to send text messages over an internet connection, just reached 300 million active users across the globe. More interestingly, it acquired 100 million users in the past four months. Its users are also sending 11 billion messages on a daily basis. Because WhatsApp continues to grow rapidly, OTT messaging services are showing no signs of stopping. This is troublesome for carriers who look to text message fees as a significant source of revenue. Read >

If you’re looking for signs of the adtech bubble popping, then Ad Age may have found a couple for you. Three high-profile adtech companies went public in the last year and a half — Mobile ad network Millennial Media, online-ad provider Marin Software and video-ad server Tremor Video — and all have seen their stocks largely rejected by investors, even while the broader market rises.

Here’s a summary of public adtech stocks, based on their IPOs (or historic highs) and their current prices:

Marin Software: Debuted at $16.26, now languishes at $12.

Millennial Media: Debuted at $23.50, now at $9.67

Tremor Video: Debuted at $8.50, now at $8.36

Velti: Debuted at $15.58, now at $1.13

Augme Technologies: Hit $4.90 in 2003, now at 36 cents.

You could add Groupon into the mix too. It debuted at $26.90, and is now worth only $8.90.

All these companies are chronically unprofitable. The Velti situation is most worrying — its revenues are down too and the company is in turnaround mode.

Search — the very cornerstone of the Web — has begun to show signs of decline on desktops and laptops.

Meanwhile, search is surging on smartphones and tablets. Mobile searches are quickly becoming the main way in which consumers find everything they need — whether it’s information, services, or physical and digital goods.

That means there’s a great opportunity, but also that search has more work to do. There are kinks to figure out in areas ranging from app discovery to tracking the effectiveness of local search ads.

LONDON (Reuters) – WPP, the world’s biggest advertising company, reported a stronger-than-expected rebound in revenue growth at the end of 2012 and nudged up its forecast for this year, citing signs of improving business confidence.

It is now the second largest search engine in the U.S., just edging past Yahoo for the first time in December, according to the latest comScore data. That’s nice and all, but Microsoft is in a partnership with Yahoo, so it probably doesn’t want to be taking share from Yahoo.

It really wants to be taking share from Google. That’s not happening. The good news from Microsoft’s perspective is that Google’s search share has been stuck around 65% for years now.

Digital Consigliere

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.